Tony Munroe
HONG KONG: International software giant Oracle Corp, which will open its
first development center in China by June, said on Tuesday it is already
planning a second center to be located in the capital Beijing.
Oracle, which cited weak Asia sales as a contributor to its earnings decline
in the quarter ended February 28, also said that while some heartening signs
have emerged in recent weeks, customers in Asia are still window-shopping
instead of buying.
Oracle sells big-ticket database and business management software to
enterprise users. "I still think that it's going to be some way down the
track before we're going to see a general recovery (in the region including
Japan)," Derek Williams, Asia-Pacific executive vice president, told
Reuters in an interview.
China and India are better stories, Williams said, referring to the two
vibrant markets as the "jewels" in Oracle's regional crown. China is
Oracle's second biggest market in Asia after Japan, and is the firm's
fastest-growing market globally.
In March, California-based Oracle announced plans to open a development
center in Shenzhen, the southern Chinese boomtown that borders Hong Kong. It
will initially have about 100 staff developing applications geared to the
mainland market.
Williams said Oracle's Beijing center would operate on a similar scale but
focus more on applications for government use. Governments account for 40-50
percent of Oracle's sales in typical markets. He declined to give a timetable
for when the Beijing center would open, but said: "It's not if, it's
when."
Unlike Oracle's 2,000-person development center in India, which does generic
research and development for the global market, Oracle's mainland centers will
focus on China. "The more localized your software is, the faster will be
your take-up rate," Williams said.
He said there were ample opportunities in China as customers upgrade their
operations in order to meet growing competition from outsiders following the
country's entry to the World Trade Organization. Beijing is also likely to see
an information technology boom as it prepares to host the 2008 Olympic Games.
Browsing, not buying
Throughout Asia, Williams said vendors of big systems software -- not just
Oracle -- are waiting for customers to get back into a spending mood.
"Projects are just not getting approved," he said.
In its third quarter that ended in February, Asia-Pacific database sales for
Oracle were down 34 percent from a year earlier, weighed down especially by
weakness in Japan. Still, the picture is not as dire as in the past three
months.
"At least we now see projects being developed," Williams said.
"That wasn't happening at all, six to eight to 12 weeks ago." Project
managers are bringing proposals to the people in their organizations that
control the budgets, he said.
"What's happening now is that when that executive sponsor takes it to
his board, the board is not approving it. They are still delaying and
deferring," he said. In particular, markets that are part of the US supply
chain must wait for a recovery in the American tech sector, Williams said,
citing Japan, Taiwan and Singapore.
On the brighter side, some Korean industrial giants -- Samsung Electronics
for one -- have begun recently investing in new facilities, Williams said. But
in general, he said, softness persists in countries awaiting a US recovery.
"SAP and the others -- IBM (International Business Machines) -- I think,
are all finding exactly the same situation," Williams said, referring to
two key rivals.